September 3, 2020

Japan’s PM Abe stepped down but Abenomics to broadly continue

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In Short

Japan’s Prime Minister Shinzo Abe declared last Friday that he will step down due to health reasons. On Tuesday, his Liberal Democratic Party (LDP) announced to deploy a reduced voting procedure, justified with the urgency of a re-election in corona times.
Japan’s PM Abe stepped down but Abenomics to broadly continue
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Highlights:

  • Japan’s Prime Minister Shinzo Abe declared last Friday that he will step down due to health reasons. On Tuesday, his Liberal Democratic Party (LDP) announced to deploy a reduced voting procedure, justified with the urgency of a re-election in corona times.
  • This will most likely benefit “mainstream” contenders and disadvantage a potentially “rebel” candidate. Currently, Chief Cabinet Secretary Yoshihide Suga seems to be in the lead.
  • Accordingly, we expect Abenomic’s loose fiscal and monetary policy to be largely maintained. This view is also re-enforced by the need to lead Japan out of recession.
  • Upon largely excluding LDP rank and file members from voting, the new PM could seek snap elections to improve his legitimacy. However, he could also choose to build up fresh voter confidence by more positive economic data. Three possible voting dates are currently discussed with a slight preference for October.

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JAPAN’S PM ABE STEPPED DOWN BUT ABENOMICS TO CONTINUE

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